Over the past few decades, Project Management has shifted from its roots in construction and defense into mainstream American business. However, many project managers' areas of expertise lie outside the perimeters of business, and most do not have the formal education in business, accounting, or finance required to take their skills to the next level. In order to succeed, today's project managers (PMs) who wish to soar to the top or remain at the helm of their profession need to have a comprehensive grasp of the business context within which they work. Providing a resourceful introduction to the interrelationships between finance, accounting, and Project Management,Project Management Accounting, Second Edition is designed to help PMs at various skill levels improve their business skills, provide advanced contributions to their organizations, and perform with greater proficiency.

Authors and industry experts Kevin Callahan, Gary Stetz, and Lynne Brooks combine their decades of Project Management experience and insights to provide professionals in the field with a 360-degree understanding of how costs interact with the general ledger. Through the authors' seasoned expertise, PMs are better equipped to assess all facets of a project with a broader understanding of the "big picture" to determine whether to continue as planned, find an alternative solution, or scrap the project altogether.

Rich with new content as well as many new case studies, this Second Edition of Project Management Accounting includes:

Updated information on Project Management and its link to Project AccountingA new chapter on assessing risk when managing projectsHow to determine the greatest tax/cost savingsProject Management in relation to a company's mission, objectives, and strategyProject Management in an agile businessCoverage of agile Project Management as applied to software and technical projectsNew, updated, and timely case studiesSample checklists to help readers get started and apply concepts to their business

Project managers must make vital decisions every day that impact the schedule, costs, or resources committed to a given project.Project Management Accounting, Second Edition, provides the tools and skills to help PMs establish with greater certainty whether these costs should be capitalized or expensed to stay on budget and improve a company's bottom line.

KEVIN R. CALLAHAN, MBA, PMP, is the founder and Chief Bulldog at The COO's Bulldog, where he specializes in helping small companies find and fix problems in their operations and entrepreneurs build their back offices.

GARY S. STETZ, MBA, CPA, CFE, CFF, ABV, is the cofounder and partner of Stetz, Belgiovine, and Manwarren (SBM). Mr. Stetz is also a director and cofounder of Allegiance Community Bank.

LYNNE M. BROOKS, PMP, is an Education Manager in the Education and Publications Group at the College of American Pathologists where she applies Project Management in developing Continuing Medical Education for physicians.

Preface xi

Acknowledgments xv

Chapter 1 Project Management and Accounting 1

Mission, Objectives, Strategy 2

Project Planning 6

Project Execution and Control 11

Notes 21

Chapter 2 Finance, Strategy, and Strategic Project Management 23

DuPont Method 24

Note 44

Chapter 3 Accounting, Finance, and Project Management 45

Project Team and Financial Success 46

Calculating Return on Investment 53

STO Solution Model 59

Implementing Strategy throughout the Company 61

Conclusion 68

Notes 69

Chapter 4 Cost 71

Definition and Purpose of Cost 73

Cost Classifications 74

Cost Decisions 80

Cost of Quality 83

Cost and Industry 85

Manufacturing Industry 89

Conclusion 90

Note 91

Chapter 5 Project Financing 93

Debt Financing 93

Corporate Bonds 95

Equity 97

Income Tax Effect 99

Cost Implications of the Funding Methodology 100

Conclusion 112

Chapter 6 Project Revenue and Cash Flows 115

Role of the Financial Manager 115

How to Calculate the Statement of Cash Flows for a Company 119

Free Cash Flows 127

Methods for Calculating a Projects Viability 128

Conclusion 137

Notes 139

Chapter 7 Creating the Project Budget 141

Introduction 141

Case Study: Pontrelli Recycling, Inc. 142

Planning for the Future 147

Creating a Project Budget 157

Review Project Financials 161

Project Cash Flow 162

Conclusion 168

Note 169

Chapter 8 Risk Assessment 171

Risk to Your Reputation 175

Competency 176

Integrity and Honesty 177

Organizational Structure 178

Human Resources 179

Reports on Financial Statements 180

Project Specific Risk 197

Engagement Acceptance 199

Conclusion 200

About the Web Site 201

Index 203